Can American Based Companies Legally Fly Drones in Canada?
YOU HAD ME AT NO!
Can American Based Companies Legally Fly Drones in Canada? The simple answer to this question is practically NO and there are mainly 2 reasons:
- Foreign entities cannot register drone systems in Canada unless they own a Canadian Corporation,
- Foreign operators/pilots require a Special Flight Operations Certificate for every drone operation.
As of June 01, 2019, in accordance with the Regulations Amending the Canadian Aviation Regulations (Remotely Piloted Aircraft Systems): SOR/2019-11, a pilot may not operate an RPAS (drone) weighing between 250 g and 25 kg unless it is registered in accordance with Transport Canada (901.04). Drone registrations can only be completed by Canadian citizens or Canadian Corporation therefore practically foreign entities cannot register drones in Canada, without extraordinary effort.
Secondly, American pilots are not permitted to fly drones in Canada without first obtaining a Special Flight Operations Certificate (SFOC) per 903.01(c) for each operation since according to Transport Canada,
“Canada has not identified reciprocal foreign operator privileges with the United States (U.S.)”.1
ONLY CANADIAN CITIZEN OR CANDIAN CORPORATIONS CAN REGISTER DRONES
American corporations or citizens can register drones but this is only possible if they first create a foreign-owned corporation in Canada that complies with both provincial and federal statutes regarding foreign ownership.
Notably, foreign entities must fulfill the specific director residency requirements both federally and/or provincially. For example, federal corporations and those operating in Ontario must have 25% of the board of directors comprised of individuals with Canadian residency status.
Where it is possible for an American corporations to open a subsidiary in the drone space, comply with the residency requirements (hire/solicit Canadian resident to sit on the board), hire, train and have certified Canadian pilots, train pilots specific to each the services workflow, secure Canadian based insurance coverage, import and register compliant drones; why would they? The scale and availability of revenue in a still very nascent industry is unpredictable making such an endeavour both legally taxing and risky.
ALL DRONE OPERATIONS CONDUCTED BY FOREIGN ENTITIES REQUIRE AN SFOC
Further still, to conduct ANY drone operation in Canada foreign operators require an SFOC by Transport Canada for each operation, which takes a minimum of 21 days. Recon Aerial has completed many SFOC applications and it takes extraordinary effort, can be a lengthy/iterative process to meet the regulators’ demands and there is no guarantee of acceptance by the regulator per 903.03.
THE PATH OF LEAST RESISTANCE
To avoid competition with Canadian operators and secure what some American companies see as their piece of the pie, the path of least resistance for many has been to strike partnership agreements with Canadian companies.
In theory, this is a great idea, and if executed well allows Canadian companies to bolster their expertise while being paid fairly for their efforts. However, being paid “fairly” is subject to debate since some American companies offer stunningly low rates to Canadian drone operators.
Recon Aerial has seen crews of 2 (an advanced pilot and visual observer) offered less than 1/2 the day rate for one entry-level photographer, who has very limited operational risk/liability as compared to companies conducting advanced drone operations.
In a race to the bottom on price, we expect the long-term result of this market behaviour will do more harm than good to the drones services sector in Canada. Extracting revenue from Canada limits the growth potential and will have negative consequences on a burgeoning drone service supply chain.
Yes, in the short term prices will be more attractive to drone services clients. However, the eventual result will be short-term relationships between U.S. companies and inexperienced, overzealous drone operators in Canada who undersell their value. Actors in any industry who undersell their value for a quick buck invite failure; expert services demand fair pay in order to fully mature and thrive.
PROPER DUE DILIGENCE
We strongly urge clients who might be considering using a U.S.-based company to conduct drone services work in Canada to conduct proper due diligence. Asking questions will help ensure that drone services clients are not unwittingly supporting illegal drone operations or inviting undue operational risk. Drone services clients who fail to properly vet drone services suppliers at a minimum may be;
- placing themselves in legal jeopardy through this association
- exposing themselves to reputation risk
- inviting undue operational risk via minimally trained drone pilots.
A FEW GOOD QUESTIONS
Here are a few good questions to ask American based firms:
- Do they have a Special Flight Operations Certificate that allows them to fly in Canada?
- Do they have Canadian based insurance coverage for the operation?
- As a foreign entity, do they own a Canadian Corporation?
- Who are the Canadian Directors fulfilling the residency requirements?
- Do they own the drones being operated in Canada?
- Are their drones registered in Canada?
- Do they have Canadian Pilot certifications appropriate to the operation type?
- How have they vetted/qualified the Canadian partner companies?
- What prior experience do their partners have undertaking the same drone operations as are being proposed?
- What training do their partners have specific to the services being offered?
- How have they verified with Transport Canada that the pilot/operator is in good standing?
- How do they conduct the legally required “site surveys”?
Please keep in mind there is MUCH more to vetting new suppliers and conducting drone operations in a highly regulated space than is listed above. Asking the appropriate questions is the first step and if it seems as though the drone services partner is on the level, this may be the case but we invite clients to contact us, we would be happy to answer any and all question.
HOW TO SUPPORT DRONE SERVICE EXCELLENCE IN CANADA?
The bottom line for us is this, there are excellent American drone service companies in the drone space and in fact, we have partnered with a few including Ai software service providers for both wind turbine and solar panel defect recognition.
However, there are also many excellent Canadian drone services companies cutting their teeth in Canada right now. They may not have the influence/might of a corporate SEM machine behind them BUT they have significant expertise and are more than capable of rising to any challenge in every drone services sector.
In our view it’s simple, hire Canadian companies to do work in Canada. We ask that purchasers of drone services support Canadian based companies and help further grow the drone services sector in Canada. Advocating for and supporting Canadian based drone services companies will foster innovation, help companies expand their expertise and this will create a locally-driven, sustainable supply chain.
In fact, many large corporate players operating in Canada and elsewhere (such as in the wind/renewable sector) already have the support of Canadian based SMEs enshrined in their vision statements and mandates and with good reason;
Supporting locally based businesses promotes growth and builds strength/resilience across all sectors!!